Yesterday was quarterly earnings day for a host of US-based tech companies, not least among which was Microsoft. And this one was doubly important for the Redmond company, as it was the first set of results with the new CEO Satya Nadella at the helm, and the first since the closing of the acquisition of Nokia’s devices and services division.
On the whole, Microsoft is in a healthy position with revenue of $23.4 billion (R246 billion) for the second three months of the year up from $19.9 billion (R209 billion) for the same period last year. Profits, however, were down by just over 7%. The bad news for phone lovers (and the reason for job losses earlier in the week) was that the drop was due to a massive $692 million (R7.28 bilion) loss from the handset division that Microsoft got in the Nokia deal. Just 5.8 million Nokia smartphones running the Windows Phone operating system were sold since the acquisition in April, which compares badly to Apple, whic sold 35.2 million iPhones in the same time frame.
Nadella expects that the Nokia business will break even in 2016 after a host of cost-cutting measures are put in place including layoffs of over 12 500 Nokia employees as part of a total of 18 000 jobs that Microsoft will be shedding over the next two years. In his earning’s call with Investors Nadella also spoke about how Microsoft planned to better spend its money in order to increase profits in the future with a particular mention of the decision to do away with the three current version of the Windows OS to create one operating system that will run on all hardware.
Microsoft’s other business units showed fantastic growth in the quarter with sales of its Windows OS, Office productivity software, database and other products rose 10.5% while sales of server-software licenses rose by 14%. Microsoft’s cloud division, which includes its Azure service that competes with Amazon and Google and the Office 365 cloud based productivity software, is set to make around $4.4 billion (R46 billion) this year alone making it one of the biggest revenue and profit earning for Microsoft, and one of the chief reasons that Nadella, who used to head up the division, was named as the company’s new CEO.[Image – Shutterstock]